Category Archives: Court Rulings

How Financial Reporting Quality Affects Expert Opinions

July 11, 2015 | Court Rulings, Financial Planning, Valuations

Financial experts are often needed in commercial litigation cases. They could be used to value a business, figure out economic damages, or to look into fraud allegations. In these cases, the quality of the numeric data that is available to the expert is critical, affecting both the time that the financial expert must put into  Continue Reading »

Court Chastens Expert Over ‘Severely’ Deficient Valuation

June 26, 2015 | Court Rulings, Valuations

Sometimes courts face a hard choice, having to decide between equally compelling and competent valuations. Not so in a recent fair value proceeding in which the skills gap between the testifying experts made it easy for the court to pick the winner. Biz divorce: The petitioner and the respondent were the two owners of a  Continue Reading »

Rules on Deducting Business Start-Up Expenses

June 24, 2015 | Business Plans, Court Rulings, Deductions

After a recent U.S. Tax Court decision, current deductions aren’t allowed for most expenses incurred during the start-up phase of a new business. When compared with the federal treatment of start-up expenses, it can be confusing for small business owners. Here’s what the rules for deducting start-up costs actually are: Deduct Section 162 Expenses Now  Continue Reading »

Tax Court: Retired Cop’s Cash for Unused Leave Wasn’t Excludible

June 16, 2015 | Court Rulings

The U.S. Tax Court has held that payments received by a police detective on his retirement, for unused sick and vacation time, were includible in income. Based on that conclusion, the court rejected the taxpayer’s argument that a portion of the vacation time and sick leave should be excludible. That portion of the payments, said  Continue Reading »

Valuations Bolster IRS’s Transferee Liability Claim

June 11, 2015 | Court Rulings

Cullifer v. Commissioner, 2014 Tax Ct. Memo LEXIS 204 (Oct. 7, 2014) In a multilayered tax shelter case, the IRS used the theory of transferee liability to pursue a $9 million claim against the petitioner in connection with the sale of company assets and company stock. Since the applicable transfer liability statute merely provided a  Continue Reading »

New Twist to Debate on Discounts in Fair Value Proceedings

May 13, 2015 | Court Rulings, Valuations

Much of the valuation community’s attention in the past few months has focused on New York fair value proceedings. Now the Utah Supreme Court adds more fodder to the discussion with a decision that rejects the lower court’s reliance on precedent that prohibits deductions for lack of marketability and tax liabilities. ‘Everything for sale’ strategy  Continue Reading »

Harsh Ruling Due to Faulty Value Allocation in a Merger

April 14, 2015 | Court Rulings, Valuations

Cavallaro v. Commissioner, 2014 Tax Ct. Memo LEXIS 189 (Sept. 17, 2014) So much for professional help! Hardworking taxpayers who built a successful business relied on estate planning professionals to effect a transfer of wealth that would minimize their tax liability. The resulting merger of two family businesses led to an IRS deficiency notice alleging  Continue Reading »

Usurped Opportunity Case Justifies Use of Defendant’s Profits

March 19, 2015 | Court Rulings

St. Alphonsus Diversified Care, Inc. v. MRI Associates, LLP, 2014 Ida. LEXIS 200 (Aug. 4, 2014) A recent lost profits case that revolved around a hospital’s breach of a partnership agreement’s noncompete clause raises issues about the right measure of damages and illustrates how an expert’s testimony succeeds in fending off various forms of attack  Continue Reading »

Court Trusts Process to Test Expert’s Calculation of Value

February 5, 2015 | Court Rulings

Hipple v. SCIX, LLC, 2014 U.S. LEXIS 113198 (Aug. 13, 2014) Calculation reports periodically become a point of contention in litigation in trial and appeals courts. Courts have responded in different ways to questions about their usefulness and reliability. A recent case explores the issue of whether expert testimony based on a calculation of value  Continue Reading »

Court Pans Valuation Based on Expert’s Fiction, Not Fact

January 8, 2015 | Court Rulings, Divorce Litigation, Valuations

Ward v. Ward, 2014 W.Va. LEXIS 128 (Feb. 14, 2014) In a divorce case, the husband appealed to the state’s highest court, arguing that the lower courts accepted a valuation of his business interest that did not reflect the company as it was on the valuation date. Rather, he said, the valuation was set by  Continue Reading »